Monday, March 2, 2015

Last December, I wrote about a slow but steady housing
rebound that seemed to suggest an even stronger 2015, and this is certainly
still the case.However, more updated
economic information from the fourth quarter of 2014 and the first part of 2015
seem to point to a different type of animal:Look for 2015 to be the year that we see the continued return of the
retail buyer, and especially the first-time home buyer.

During the depths of the Great Recession, perhaps the single
most important saving grace which led us out of the crisis were investors who
realized that the crash in home prices meant that many owner-occupied homes were
excellent rental property investments.Their purchases of millions of otherwise vacant homes helped to
establish a pricing floor for foreclosed properties.However, by the end of 2013, rising prices
and more competitive supply for these homes meant declining profits for these
investors, so they gradually disappeared from the market through the middle of
2014.

At the time, traditional buyers who live in these homes –
also known as retail buyers – were not yet ready to fill the gap due to a
combination of tight credit, lack of down payments and a job market which was
improving but still had yet to impact wage growth.Since then, however, several important
factors have changed, mostly due to a strengthening job market and the relaxing
of credit standards.

For all of 2014, almost three million new jobs were added –
the most since 1999, which was the peak of in the first phase of the
Internet-related technology boom.And,
while many of these jobs were simply replacing the millions lost during the
previous recession, these gains were across the board and included multiple
industries.During the last quarter of
2014, nearly 290,000 jobs were created per month, and in January 2015 another
257,000 jobs were added.

However, even with these impressive gains, during 2014 wage
growth barely budged over two percent, which meant that employees simply didn’t
have extra cash to use for down payments.Until the prime-age employment-to-population ratio rises from the
current 77.2 to closer to 80 percent, the U.S. economy likely won’t see
consistent and meaningful wage growth.

It is mainly due to this weakness in wage growth – along with inflation
that remains below its target of two percent and the decline in GDP growthduring the fourth quarter of
2014 -- that Federal Reserve Chair Janet Yellen has continued to postpone any
hike in short-term interest rates.

Despite the sluggishness in wage growth, consumer spending
did rebound strongly in 2014, adding 1.7 percentage points to overall GDP
growth and posting the best showing since 2006.And while GDP growth was much faster in the middle of the year before
slowing to 2.2 percent in the fourth quarter of 2014, much of that slowing was
due to an increase in imports related to increased consumer spending and a
decline in federal government spending.

For lenders, one way for them to encourage the return of the
retail buyer is to relax lending standards – helped in large part by FHA,
Fannie and Freddie.Last December,
FannieMae launched its own program for first-time homebuyers with FICO scores
as low as 620, limited cash-out refinances, and down payments of just three
percent.FreddieMac punted the start of
its own low-down payment program until March 23, requiring borrowers to first
seek credit counseling and setting its own FICO floor at 660.Meanwhile, FHA has lowered its MIP insurance
for 30-year mortgages to just 0.85 percent that, when combined with low
interest rates, provides the lowest-cost effective financing available in its
80-year history.

For home builders, these changes bode well for 2015, with
NAHB’s Leading Markets Index moving up to .90 in the fourth quarter of 2014,
which means that the national housing market is back to 90 percent of normal
economic and housing activity.Of the
360 metro areas tracked by this index, 80 percent saw increases during the
quarter.At the same time, NAHB’s
Housing Opportunity Index also showed housing affordability rising to nearly 63
percent, due largely to lower interest rates and some lower-priced housing
inventory.

Fortunately, construction lenders have also taken notice,
with the stock of AD&C loans made by FDIC-insured institutions rising by 17
percent between the fourth quarters of 2013 and 2014.Even
with such lending still strongly subdued from the peak of 2008, this gradual
thawing could help provide much-needed inventory for the first-time buyers
waiting in the wings.

Recently, a guy named Ramtin Ghaneeian reached out to me to tell me about a company he and his brother launched last November called LotPlans. Based in Santa Monica -- the base of today's burgeoning "Silicon Coast" -- the Ghaneeian brothers launched their Web-based e-commerce service out of frustration when doing their own real estate deals and looking for custom home plans that were affordable and practical.

Although there are certainly other Web sites out there which offer ready-to-go plans for custom homes, LotPlans hopes to carve their own niche through a more detailed vetting process for submitted plans as well as the ability to customize and work with a network of experts they've assembled. I asked Ramtin to tell me what makes his company different, and here's what he had to say:

"At LotPlans, we understand that there are other companies selling house plans. However, we are a boutique shop with a huge online presence. What that means is, at LotPlans, we cater to quality versus quantity. Because we can modify any plan that we have on our site, our vision is 'If you want to build it, we have it - or we can design it!'

That being said, we don't want to feature everyone's plans on our site. In fact, we've turned away some designers and architects that we thought weren't on par with our company.

My brother and I come from a development background. And, as we were very fresh in the business, we felt there was a need for a company like LotPlans that's more personable and caters to both architects and potential home-builders. In speaking with a lot of architects, they didn't necessarily have the best relationship with their plan publishers.

At LotPlans, we develop strong relationships with our partners because we we feel like we will showcase plans on our Web site that you won't find anywhere else, along with a heightened customer experience for our clients. After my brother and I paid the high cost in fess (and time) for house plans designed for development, we thought we would launch a more user-friendly, cost-effective, and efficient company to help developers, home builders, and home designers alike.

We are a newer company, and we have grown organically. We began by pounding the pavement, begging architects and designers to trust our vision (even though we didn't even have a functioning Web site at that time) to now, where we have designers coming to us to publish their plans.

We have strict quality control, meaning we don't just publish everything on our site. That's why I like to refer to us as the low-cost, high-end boutique of online plans - and a Web site that comes with great customer service.
This has grown into our passion and our customers definitely feel that when they use our service."

So if you're looking to build your dream home, add a guest house to an existing property or even build your own homes for sale as a builder, LotPlans may have what you need. I wish these guys the best of luck just as the housing rebound turns to the next phase in which more retail buyers (versus investors) come into the marketplace.

Some of these are ideas are pretty interesting, and not just for a real estate agent or broker, but certainly for builders and sales agents looking to reach out in different ways. Here's an abbreviated list, but there's a lot more detail on the original post:

1. Write or Post Content Online such as:

Video tour of a local neighborhood and a 500 word
description of what makes it great

3 photographs of a neighborhood and your opinion on why to
move there

Photographs and video tours comparing schools in the area

2. Call Past Clients. Hunt Down Referrals.

You have to ask most people 7 times for a referral before
they will take you seriously. Do not be afraid to ask.

3. New Target Markets

Pick a location you haven’t been in over a year. This works
particularly well if you’ve never been there before. Here’s a short list of
ideas: a bar, a different church, a college campus, a coffeeshop, a yoga
studio, a orchestra concert, a school football game, the mall.Observe.Chat.Think of new ways to market
to new target audiences.

4. Pop-Bys

Pop-bys are gifts you give to past clients or people you
want to be a client. They are a great way to surprise individuals and make
their day. They also provide awesome conversations starters.

5. Go Get Coffee. Leave The Office.

Pick a busy coffeeshop and sit down. People will be working
and interacting.This should give you
the motivation and inspiration you need to start over on another day of
marketing.

6. Reach Out To Educators

Reach out to a local elementary school teacher this week and
offer to do a talk on careers.You never
know what will happen! Maybe the teacher will give you a backlink from their
blog. Or maybe you’ll meet a parent that is looking to buy/sell soon. Either
way, you’ll build new connections. You’ll have more to talk about on your
social media page too.

7. Contact Local Business Owners

If you’re in a rut, how do you think other local business
owners feel?They are in the same
position as you. Restaurants face stiff competition from food chains. Local
hardware stores face the Home Depots of the world. Reach out to these people
and suggest co-marketing together.

8. Sit On A Board

Quick questions: Who is always featured on websites,
newsletters, and other informational material?

Individuals who sit on boards. It isn’t the most immediate
fix for your marketing, but this tactic will provide substantial value over the
long haul.

9. Reach Out To An Agent Working Elsewhere

Reaching out to a top agent in another market for advice is
a great way to get new ideas. You’ll see what’s working in their area and might
be able to apply some of their tactics to your local market.

Be sure to keep the relationship a two way street. Provide
feedback to the responses they send you.

...As a usual part of the show, the 35th annual National Sales and Marketing Awards – known as The Nationals – paid tribute to notable achievements by homebuilders, architects, designers and other associates as well as sales and marketing councils.

Since the winners of The Nationals tend to point towards the latest trends in new home architecture and design, I wanted to focus on a few of these local stand-out projects as well as to offer my congratulations to the very talented folks who made it all possible...